What's Happening in Sustainability & ESG (Week Recap 07.11 - 13.11) 🌎

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This week’s read time: 8 minutes

Welcome to this edition of Green Digest, where you will get updated about everything happening in the sustainability & ESG space in less than 10 minutes. 🌎We go through tons of articles and data from the most reliable sources, filter & simplify them, and serve them to you in bite-sized chunks every week. 🍀

⭐️ The week’s top news:

🌍 A report from the UN reveals that global fossil fuel production in 2030 is projected to be more than double the level needed to meet climate goals set under the Paris Agreement. The analysis shows that the 20 major fossil fuel producers plan to produce 110% more fossil fuels in 2030 than is consistent with limiting warming to 1.5°C. Additionally, none of these countries have committed to reducing coal, oil, and gas production in line with the 1.5°C target. The report calls for a reduction in oil production by almost 70% from current levels by 2050 to align with the 1.5°C goal. The good news is that over 60 countries, including major emerging economies and developed countries, have backed a deal spearheaded by the EU, US, and UAE to triple renewable energy this decade and phase out coal. Negotiations with China and India to join the pledge are underway, and early support for the deal is expected to set a positive tone for the upcoming COP28.

🟢 The European Financial Reporting Advisory Group (EFRAG) and CDP have announced a collaboration to drive the market uptake of the European Sustainability Reporting Standards (ESRS). This cooperation aims to align CDP's global environmental disclosure platform with the EU's environmental reporting standards and provide capacity-building support for companies to meet regulatory requirements. The collaboration will offer webinars and technical guidance materials to help companies report on ESRS data points through CDP. The ESRS will apply to around 50,000 businesses starting January 2024 and will have implications for non-EU companies as well.

📄 The Global Reporting Initiative (GRI) and the IFRS Foundation have also announced a new initiative called the Sustainability Innovation Lab (SIL) to help companies meet evolving sustainability reporting requirements. The SIL will focus on advancing reporting capabilities using GRI Standards and IFRS Sustainability Disclosure Standards, collaborating with stakeholders to identify emerging sustainability topics and develop best practices. It will also provide capacity building for supply chain participants. The initiative will be based in Singapore and supported by offices throughout Asia, with working groups focusing on digital taxonomies, audit and assurance, smaller companies, and public sector reporting.

🇪🇺 The EU has agreed to pass a fiercely contested law to restore degraded natural ecosystems, requiring countries to introduce measures to restore nature on 20% of the EU's land and sea by 2030. The aim is to reverse the decline of Europe's natural habitats, with proposed targets to restore peatlands being weakened. The deal is a compromise after months of political campaigning, with some governments and lawmakers arguing for strong action to rescue declining species and mitigate climate impacts. In other news, new EU pollution rules for combustion engine cars and trucks, known as "Euro 7," are set to be less ambitious than originally planned. Lawmakers have voted to delay and weaken some of the regulations, including weaker limits on nitrous oxides for trucks and a delayed implementation timeline. Green lawmakers criticized the decision as a missed opportunity to reduce premature deaths caused by vehicle pollution, while some countries and carmakers argued that the original rules would be too costly and suggested focusing on EVs instead.

• A Bloomberg Intelligence (BI) survey reveals that the majority of senior investors and business executives plan to increase ESG investment over the next 5 years. Despite greenwashing scrutiny and political pushback, the trend of increasing focus on ESG remains intact, with executives reporting that the benefits of ESG outweigh the risks and investors focusing on ESG more than ever before. For the report, BI’s inaugural ESG Market Navigator, Bloomberg surveyed 250 C-suite executives across a wide range of sectors, and 250 senior investors including asset managers, wealth managers, and investment banks, across North America, Europe, and Asia Pacific. A large majority of both groups, including 90% of investors and 67% of executives acknowledged that ESG has entered the mainstream. Among investors, 86% reported that they view ESG as part of their fiduciary duty, 90% said that ESG investments were expected to deliver better returns, while 92% said that ESG supports a more resilient portfolio strategy, and 89% reported that ESG analysis supports better-informed decisions. 📈

• France has updated its Socially Responsible Investment (SRI) label to exclude most oil and gas companies from SRI-labelled funds, announced the Minister of the Economy. The new rules require SRI-labelled funds to exclude companies that exploit coal or unconventional hydrocarbons and launch new oil and gas projects. Companies included in SRI-labelled funds must also have a Paris Agreement-aligned transition plan. The update aims to make the label more climate-oriented and will come into effect in March 2024. 🇫🇷

• The Dutch Authority for the Financial Markets (AFM) has called for sustainability impact disclosures for all financial products in a position paper on proposed reforms to the EU's Sustainable Finance Disclosure Regulation (SFDR). The AFM recommends removing the Article 8 and 9 classification categories and introducing a new sustainable investment labeling regime. They also propose that all financial products, even those without sustainability features, provide sustainability-related disclosures. The aim is to make the SFDR regulation more meaningful to investors and facilitate capital flows towards sustainable investments. 🇳🇱

• Canadian company GHGSat has launched the world's first satellite aimed at detecting and sharing CO2 emissions data from individual facilities - Vanguard. The satellite will help hold polluting industries accountable and provide data for sale to emitters, governments, and scientists. The satellite will focus on facility-level emissions, which are currently not monitored by existing CO2 monitoring satellites. The data collected will improve emissions inventories, scientific modeling, and corporate GHG reporting. 📡

🧐 What are companies doing?

• BlackRock, the world's largest money manager, will invest $550 million in Occidental Petroleum's direct air capture (DAC) plant in Texas. Occidental's DAC facility is a crucial test for the technology's economics and its role in decarbonizing the industry. DAC is estimated to become a multi-trillion market by 2050. Berkshire Hathaway has also endorsed Occidental's plans by increasing its stake in the company. Occidental also plans to license its technology to partners, potentially supporting over 1,000 projects to mitigate global warming. Occidental's first large-scale DAC plant is set to start in mid-2025, with a franchise-like model where partners will be responsible for management and construction. The company expects to spend about $600 million per year through 2026 to build its own projects and licensing DAC technology is seen as a way to meet high demand for CO2 removal credits. In other news, California climate tech company Heirloom has already opened the first US commercial DAC plant last week. The facility, using crushed limestone, can capture 1,000 tonnes of CO2 per year. The cost of carbon removal by direct air capture is currently around $600-$1,000 per ton, but Heirloom aims to cut costs through scaling up. The US government aims for a cost of $100 per ton in about a decade. 🟢

• Montreal-based renewable energy firm TES Canada H2 Inc plans to build a C$4 billion green hydrogen project in Quebec. The project is expected to create 200 permanent jobs, reduce 3% of the province's carbon emissions by 2030, and produce 70,000 tonnes of green hydrogen annually. The project will use a wind and solar farm for energy production and contribute to decarbonizing long-haul transportation and producing renewable natural gas. 🟢

• Exxon Mobil plans to start lithium production in Arkansas by 2026, aiming to produce at least 10,000 tonnes per year with partner Tetra Technologies. This move comes as emerging technologies seek to increase global production of lithium, which is in high demand for electric vehicle batteries. Exxon has already been drilling wells in Arkansas and testing direct lithium extraction technology. 🔋

• Moody's Investors Service has launched a framework for Net Zero Assessments (NZAs) to evaluate and compare companies' decarbonization plans. The NZAs address challenges in comparing emissions reduction plans, considering factors such as targets, implementation, and governance. The scores, ranging from NZ-1 to NZ-5, indicate an entity's decarbonization profile relative to a Paris Agreement-consistent pathway. The framework applies to non-financial corporates and provides an independent assessment of their emissions reduction profile. 📄

• Investment management firm Fidelity International has announced its Nature Roadmap, which includes a commitment to vote against companies that do not meet deforestation-related expectations starting in 2024. This follows Fidelity's signing of the Financial Sector Commitment Letter on Eliminating Commodity-Driven Deforestation at COP26 and its participation in the Finance for Biodiversity pledge. 🟢

💸 Recent funding rounds, acquisitions, and private equity:

🌳 Manulife Investment Management has raised $224.5 million for its Manulife Forest Climate Fund, which aims to invest in sustainably managed forestland assets prioritizing carbon sequestration. The fund offers investors the opportunity to support climate change mitigation and generate financial returns through carbon credits. The raised capital reflects strong investor interest in climate solutions and aligns with their carbon emissions reduction goals. The fund's long-term supply of carbon credits can be used by investors or monetized in carbon markets.

🚙 Euler Motors, an India-based electric vehicle maker, has raised $144 million in a Series-C extension round, with the funds to be used for pan-India expansion and strengthening the service and charging network. The company aims to enter 40 cities by the end of FY24 and plans to raise additional funds to scale up production and expand globally.

🧲 Sustainable magnet technology company Niron Magnetics has raised $33 million in funding, with investments from GM Ventures and Stellantis Ventures. Niron Magnetics has developed "Clean Earth Magnets" made from commonly available iron and nitrogen materials, offering a stable and sustainable alternative to rare earth magnets. The funding will enable Niron to expand production facilities and scale manufacturing capacity.

🔋 Princeton NuEnergy (PNE), a cleantech startup focused on battery recycling, has raised $16 million in Series A funding. PNE utilizes a low-temperature plasma-assisted separation process to recycle lithium-ion batteries, reducing costs, waste, and carbon emissions. The funding will be used to expand processing capacity and support company operations.

That’s it for this week, thanks for making it to the end! If you enjoyed reading this newsletter, please don’t forget to subscribe and share it 🍀